Geopolitical Crises and Resources Tax Revenue

Abstract

This study assesses how geopolitical crises influence tax revenue derived from natural resources. Merging International Crisis Behavior data with the Global ICTD-WIDER Government Revenue data covering 1980-2021, we document a dynamic relationship between interstate conflicts and resource revenue while simultaneously controlling for trade openness, disparities among nations, and the diffusion of oil price shocks. While trade openness mediates the geopolitical crisis-natural resource relation; export growth shows a moderating role in the relation of interest. Given the positive influence of political crisis events on the host country's resources tax revenue, we provide policy implications to how governments in these areas can better manage their income source during the geopolitical crisis, especially in developed countries, or areas where citizens have a greater voice and influence on their government in which the relationship is most pronounced.

Keywords: JEL Classification: H2, Q33, Q4 Tax revenue, resources tax, geopolitical crises